A significant proportion of Australians are potentially missing out on tens of thousands of dollars in retirement savings by remaining with underperforming superannuation funds. New findings reveal that more than 30% of people have never switched funds since entering the workforce, despite available tools to compare performance and fees.
The study has reignited calls for Australians to take greater control of their superannuation, with experts warning that passive financial behaviour may result in reduced returns and unnecessary fees over time.
Millions Sticking With Default Superannuation Funds From First Jobs
According to recent data from Finder, 32% of Australians are still using the default superannuation fund assigned by their first employer. A further 26% are with the default fund of their current employer. Only 41% have actively chosen their current fund.
Although default funds are legally required to meet minimum performance standards, the disparity between the top and bottom performers remains considerable. Yahoo Finance reports that a comparison of 54 super funds showed 10-year net returns ranging from 5.55% to 7.66% per annum, with associated annual fees varying from $671 to $1,121. Over time, these differences can significantly affect retirement balances.
Finder calculated that increasing the average return on a $100,000 super balance from 6% to 7% could grow the fund by $186,876 over 30 years—without any additional contributions. The organisation dubbed this lost growth the “lazy tax”, highlighting the cost of inaction.
“Review your super fund performance regularly. Put very simply, performance should be high, and fees should be low,” said Pascale Helyar-Moray, Finder’s superannuation literacy expert.
Lack of Engagement Spreads Beyond Super to Other Recurring Costs
The issue of passive financial management is not limited to retirement savings. A separate Finder report showed Australians spent an estimated $4.5 billion extra in 2023 by failing to switch providers for essential services such as electricity, internet and mobile phones.
Dubbed the “loyalty tax”, this overspending equated to around $331 per person. Some energy providers, for instance, are offering up to $150 in credit or thousands of Qantas points to attract new customers, according to Finder’s tech and utilities expert, Mariam Gabaji.
In addition, data from Westpac revealed that 30% of Australians lose up to $600 annually due to forgotten or duplicate subscriptions. Common reasons included missing cancellation deadlines after free trials (38%), forgetting about active subscriptions (32%), and difficulty cancelling them (31%). These trends reflect a broader need for Australians to be more proactive with recurring financial decisions, particularly those that compound over time.
